Political Legitimacy and the Special Interest State

The current state of American politics is even worse than most people want to admit.Commentary from both ends of the political spectrum assumes that we are in a debate over the scope and function of government. Should we have a welfare state in which the vicissitudes of life are smoothed out in favor of more egalitarian ethic? Does an economy which rewards the most creative and energetic 20% actually result in a bigger pie for all? Who is right about economic policy, Keynes or Hayek?

These questions are important. But they have little to do with the real crisis, which concerns the fundamental legitimacy of the political system.

Over the past 80 years, we have created not a welfare state, but a Special Interest State. In this model, various interests are allowed to capture pieces of the government -- executive departments, congressional committees or appropriators, chunks of the tax code, regulatory agencies -- and then wield their power for the advantage of the particular interest.

Thus, the radical environmentalists have seized the EPA and related agencies, where they get to block economic activity and energy extraction for the greater glory of Gaia. The unions have taken over labor and the NLRB. The tax code is so riddled with special favors that fully half of the tax that would be collected under neutral principles is forgiven. The Treasury and the Fed are the pillars of the financial establishment.

Real estate and financial interests have determined housing policy since the 1930s, and when they were joined by the racial spoils and anti-poverty interests, their rapacity turned into utter disaster. The elderly have established the principle that being old, no matter how rich you are, entitles you to use Medicare to obtain subsidies from the young, no matter how poor. An academic establishment fattens on federal loans and regulatory requirements.

Crony capitalists get billions for green energy, or high-speed rail, or from regulations governing light bulbs. Public employees perform vital functions, but they also receive above-market pay, benefits, and job security. Beneficiaries of government support of all kinds, ranging from farm subsidies to welfare recipients, have become self-aware interests, teamed up with the bureaucracies that supply them.

The total of interest-driven government actions is boggling. The federal government allocates about 25% of the GDP, state/local governments account for another 16%, and the regulatory and legal systems commandeer at least 15-20% of supposedly "private" expenditure. And still the demands escalate, as ever more interests elbow their way to the budget or regulatory troughs.

There is no resemblance between this current government and any coherent idea of a welfare state. The only "welfare" involved is that of the myriad groups, not of the collective public.

This Special Interest State is not the polity envisioned by the Founders, who emphasized that government actions should advance public and not private benefits. They abhorred "class legislation," and right up until the New Deal, this abhorrence was enforced by the courts as well as by the overall political ethic of the nation. If one reads the Federalist papers, one understands that the Founders feared capture by self-interested "faction" above all else, and most fearful of all was capture by a faction that made up a majority.

The Founders also feared "systemic corruption," in which the fruits of government favoritism are recycled back into the political system to ensure the continuation in power of the grantors of the favors. It took the New Deal and the Great Society to convert the concept of interest group capture of government into an affirmative philosophy of government, and to turn our elections into contests between competing groups of looters.

The political legitimacy of the American republic was based on the consent of the people, which was in turn conditioned on the understanding that government must be limited to performing genuinely public functions and cannot be allowed to become a tool for whatever interests capture the levers of power.

The Special Interest State transgresses these principles, and recent polls indicate that fewer than 25% of the people say that government has the consent of the governed. People did not consent to be looted by venture socialist friends of whatever administration is in power, or by cozy dealings between public unions and their pet elected officials. The inhabitants of California's Central Valley did not agree to a system in which coastal environmentalists destroy their livelihoods for the sake of the Delta Smelt. No one wants a medical system governed by trial lawyers combined with those who most effectively lobby HHS.

High-flown discussion of the "welfare state," or of the need for government "to solve national problems" or "to wield power commensurate with the complexities of the technological age," is a cover story for the political theory that any coalition of special interests that can cobble together a temporary 51% majority is then permitted to use governmental power for its own ends.

This is not the republic created by the Founders, nor is it one that will for long be accepted as legitimate by the American people. So the current debate is not really over the details of the welfare state. It is over the fundamentals of republican government, and how to restore our depleted reservoir of political legitimacy.

James V. DeLong is the author of Ending 'Big SIS' (The Special Interest State) and Renewing the American Republic and an adjunct scholar of the Competitive Enterprise Institute. He can be reached at SpecialInterestState@gmail.com.

The current state of American politics is even worse than most people want to admit.

Commentary from both ends of the political spectrum assumes that we are in a debate over the scope and function of government. Should we have a welfare state in which the vicissitudes of life are smoothed out in favor of more egalitarian ethic? Does an economy which rewards the most creative and energetic 20% actually result in a bigger pie for all? Who is right about economic policy, Keynes or Hayek?

These questions are important. But they have little to do with the real crisis, which concerns the fundamental legitimacy of the political system.

Over the past 80 years, we have created not a welfare state, but a Special Interest State. In this model, various interests are allowed to capture pieces of the government -- executive departments, congressional committees or appropriators, chunks of the tax code, regulatory agencies -- and then wield their power for the advantage of the particular interest.

Thus, the radical environmentalists have seized the EPA and related agencies, where they get to block economic activity and energy extraction for the greater glory of Gaia. The unions have taken over labor and the NLRB. The tax code is so riddled with special favors that fully half of the tax that would be collected under neutral principles is forgiven. The Treasury and the Fed are the pillars of the financial establishment.

Real estate and financial interests have determined housing policy since the 1930s, and when they were joined by the racial spoils and anti-poverty interests, their rapacity turned into utter disaster. The elderly have established the principle that being old, no matter how rich you are, entitles you to use Medicare to obtain subsidies from the young, no matter how poor. An academic establishment fattens on federal loans and regulatory requirements.

Crony capitalists get billions for green energy, or high-speed rail, or from regulations governing light bulbs. Public employees perform vital functions, but they also receive above-market pay, benefits, and job security. Beneficiaries of government support of all kinds, ranging from farm subsidies to welfare recipients, have become self-aware interests, teamed up with the bureaucracies that supply them.

The total of interest-driven government actions is boggling. The federal government allocates about 25% of the GDP, state/local governments account for another 16%, and the regulatory and legal systems commandeer at least 15-20% of supposedly "private" expenditure. And still the demands escalate, as ever more interests elbow their way to the budget or regulatory troughs.

There is no resemblance between this current government and any coherent idea of a welfare state. The only "welfare" involved is that of the myriad groups, not of the collective public.

This Special Interest State is not the polity envisioned by the Founders, who emphasized that government actions should advance public and not private benefits. They abhorred "class legislation," and right up until the New Deal, this abhorrence was enforced by the courts as well as by the overall political ethic of the nation. If one reads the Federalist papers, one understands that the Founders feared capture by self-interested "faction" above all else, and most fearful of all was capture by a faction that made up a majority.

The Founders also feared "systemic corruption," in which the fruits of government favoritism are recycled back into the political system to ensure the continuation in power of the grantors of the favors. It took the New Deal and the Great Society to convert the concept of interest group capture of government into an affirmative philosophy of government, and to turn our elections into contests between competing groups of looters.

The political legitimacy of the American republic was based on the consent of the people, which was in turn conditioned on the understanding that government must be limited to performing genuinely public functions and cannot be allowed to become a tool for whatever interests capture the levers of power.

The Special Interest State transgresses these principles, and recent polls indicate that fewer than 25% of the people say that government has the consent of the governed. People did not consent to be looted by venture socialist friends of whatever administration is in power, or by cozy dealings between public unions and their pet elected officials. The inhabitants of California's Central Valley did not agree to a system in which coastal environmentalists destroy their livelihoods for the sake of the Delta Smelt. No one wants a medical system governed by trial lawyers combined with those who most effectively lobby HHS.

High-flown discussion of the "welfare state," or of the need for government "to solve national problems" or "to wield power commensurate with the complexities of the technological age," is a cover story for the political theory that any coalition of special interests that can cobble together a temporary 51% majority is then permitted to use governmental power for its own ends.

This is not the republic created by the Founders, nor is it one that will for long be accepted as legitimate by the American people. So the current debate is not really over the details of the welfare state. It is over the fundamentals of republican government, and how to restore our depleted reservoir of political legitimacy.

James V. DeLong is the author of Ending 'Big SIS' (The Special Interest State) and Renewing the American Republic and an adjunct scholar of the Competitive Enterprise Institute. He can be reached at SpecialInterestState@gmail.com.